High Fare Leader?

[Rhino]

WN does NOT outsource mx more than other carriers. Insp89's assertions are always ill-informed. Shame on you, sfb, for believing that ill-informed gadfly! WN outsources D-checks only. As does Insp89's carrier. To Latin America, one might add.

Wn sends their A/C to Canada, where socialism has driven down wages to where they are competive.

 

[insp89]

But... it's not just fuel. It's everything else, too.
Rhino answered it just as well as I could; they have earnings growth targets that they've set, and they need to nudge the fare levels up to get there. Bumping up fares by $10 on longer stages works out to be an increase of 3-10%.
It has nothing to do with them being super-human; the company's processes are geared toward having them work efficiently, and they are well-trained. You don't need as many people to run the WN operation in, say, PHX (even with a comparable number of mainline departures) because they don't operate a banked hub. They need to lease about half as many gates as US for a similar number daily mainline flights.
And the network airlines have union contracts; your point being?
True, but you'd need to include all the IT and reservations functions which US & HP have outsourced as well. And the outsourced ground handling, cleaning, etc. where those occur.

The whole point is that WN's cost advantage (going beyond just fuel) allows them to control the revenue side in markets where they compete head-to-head. Southwest will choose to price at levels where they can make a profit and allow other airlines to choose if they want to try to burn money by getting into fare wars.

When WN initiates a fare increase and everyone marches in lock-step with them, they control the revenue side of the equation. When other airlines initiate fare increases, they almost always exclude markets where WN competes -- because WN controls the revenue side.

I quoted you directly from your statement that "Only a moron would keep his head in the sand when it comes to WN's Fuel Hedging Erosion."

sfb,
It's just not fuel?
I dare say if you look at it honestly, Fuel is BY FAR WN's major advantage.[Today]

I do not know of any airline that is looking at getting into a "fare war" with WN, If they were, would'nt these airlines be Lowering their fares NOW, instead of raising them along with WN ?
Do you honestly think WN's fare increases have nothing to do with their rising fuel and labor costs?
My "point being" about the union contracts, Obviously WN's labor force is now working under contracts that have not been raped and pillaged by a rubber stamping bankruptcy judge.

 

[insp89]

WN does NOT outsource mx more than other carriers. Insp89's assertions are always ill-informed. Shame on you, sfb, for believing that ill-informed gadfly! WN outsources D-checks only. As does Insp89's carrier. To Latin America, one might add.

Wn sends their A/C to Canada, where socialism has driven down wages to where they are competive.

Rhino,
Now I'm a ill-informed gadfly? I was just getting over the moron incident
Evidently you are not aware that U does 50% of their 737 Heavy "Q" Checks in CLT, and 100% of their Airbus 320 family "S" checks in PIT.
Would you be so kind to list the percentage of Heavy Maintenance 737 "Q" checks that WN performs inhouse?
For someone "informed", You probably know the percentage right off the top of your head.

 

[insp89]

I said that only a moron would short love, Insp89. I doubt that includes you, so relax.

The intuitively obvious reason that WN raised fares was to increase revenue. WN's business plan has a goal of 15% operating margin. WN's costs have gone up (employee compensation, less hedges, etc.) disproportionately to the fare structure.

WN's fare hikes stick, if you don't know why, then you really know little about the industry and how it works, as indicated by your posts. But simply put, WN can set a city-pair price where they make a profit and nobody else can because their costs are lower. So when WN raises fares, the OALs are happy to join in. They then make a ltttle more or lose a little less, depending on city/carrier.

As far as int'l goes, there is a lot of 737 int'l flying already. Much of it at premium fares.

Rhino,
I really don't believe the reason WN's fare hikes stick is as complicated as you make it.
It's actually rather simple, WN's competition wants to make money.
WN's costs are indeed lower than other airlines, but the gap is narrowing, thus the reason for WN's Fare Hikes.
What is your definition of 737 International flying ?
..

 

[WNjetdoc]

What happened to the low fare "leader"? Is the struggle coming?
http://yahoo.reuters.com/news/articlehybri...News&rpc=44

Sucks to be you...is it that bad over there that you have to hunt for stuff like this? You need to get over your insecurities over WN and try to improve your airline...put the effort you use on WN and posting what you think as negative press and use it to make your airline a better place, k?

 

[ClueByFour]

Rhino,
Now I'm a ill-informed gadfly? I was just getting over the moron incident
Evidently you are not aware that U does 50% of their 737 Heavy "Q" Checks in CLT, and 100% of their Airbus 320 family "S" checks in PIT.
Would you be so kind to list the percentage of Heavy Maintenance 737 "Q" checks that WN performs inhouse?
For someone "informed", You probably know the percentage right off the top of your head.

Fact check: So, how many of the East 757/767/330 checks are done inhouse? Or any of the West work?

 

[Borescope]

Sucks to be you...is it that bad over there that you have to hunt for stuff like this? You need to get over your insecurities over WN and try to improve your airline...put the effort you use on WN and posting what you think as negative press and use it to make your airline a better place, k?

Got ya.....didn't I?

 

[insp89]

Fact check: So, how many of the East 757/767/330 checks are done inhouse? Or any of the West work?

Hey Clue,
The answer to your question about 757/767/330 checks done inhouse @ Usairways is : ZERO.
So What?, Has anyone on here said otherwise ?

CLT will be getting [WEST] 737 checks later this year..

Got any more FACTS you want to check ?

 

[Borescope]

Rhino,
We're waiting on those % for the "Q" checks and the 73 int'l flying. Is the In'tl flying when you deviate around TS's at ELP and stray across the border to Mexico??

 

[KCFlyer]

Rhino,
We're waiting on those % for the "Q" checks and the 73 int'l flying. Is the In'tl flying when you deviate around TS's at ELP and stray across the border to Mexico??

No...the lack of international flying is the mark of an airline that admits it is not seeking to be all things to all people. If you want to go international, you don't fly Southwest. If you don't want to fly Southwest from Kansas City to Seattle because they don't offer international service....well...spend your money elsewhere.

 

[Borescope]

No...the lack of international flying is the mark of an airline that admits it is not seeking to be all things to all people. If you want to go international, you don't fly Southwest. If you don't want to fly Southwest from Kansas City to Seattle because they don't offer international service....well...spend your money elsewhere.

KC,
No one said anything about WN flying 737's on int'l routes. Anyone who has ever flow on an airplane knows that. What was said was the 737 is used on many int'l routes (notice it say the, not, Southwest), and there was a question in an earlier post on the specific routes. BTW, WN isn't the only airline that flies over or near ELP.

 

[insp89]

You guys absolutely amaze me.

When it comes to the reason for SWA's continued success everybody picks out ONE THING and it's always the wrong thing.

Fuel Hedges have made their life a bit easier and given them a competitive advantage. But they didn't always have that advantage over their last 35 years of profitability.

Simply put SWA has a different business model than all of the legacy carriers. That business model allows them,

To fly their assets 20 to 30 percent longer each day.

Allows SWA to operate with about 20% LESS employees per aircraft, taking things like outsourcing into consideration which SWA does little of, especially at the airport.

Their cost advantage is of a structural nature, the fuel hedges have allowed them to maintain employee morale and profitability through some very tough times.

Another of the interesting facts with SWA is found when one compares Annual Reports. Look at SWA's percentage of Labor Costs compared to some legacy carriers. It's much higher because no flying is outsourced and therefore SWA doesn't have to guarantee a profit to the likes of Mesa & Republic.

All of these things add up to a tighter ship and therefore more profit dollars.

Once you get past the fact that SWA sells the highest percentage full fare tickets of any domestice carrier then you can start to "look inside" the numbers and what you find is a superior business model, well executed.

Well Bob, Sometimes you absolutely amaze me, so I guess we're even.

I have not read that anyone disagrees that SWA operates a different business model.

I do believe that you are not giving enough credit to SWA's Fuel hedging in [recent] years.
Southwest was not the only airline that was profitable [some years] during the last 35 years.

Southwest does little outsourcing ? Please check the amount of outsourcing they do in aircraft maintenance..
[This is where your [20%] less employees/ aircraft is very deceiving.]
There is no doubt that Southwest is a very well run airline,
But it is my contention it was their fuel hedging [in recent years] is [mainly] what has carried them through some very difficult times in the airline industry.

 

[jimntx]

Southwest was not the only airline that was profitable [some years] during the last 35 years.

Southwest does little outsourcing ? Please check the amount of outsourcing they do in aircraft maintenance..
[This is where your [20%] less employees/ aircraft is very deceiving.]
There is no doubt that Southwest is a very well run airline,
But it is my contention it was their fuel hedging [in recent years] is [mainly] what has carried them through some very difficult times in the airline industry.

Maybe not, but they are the only major airline that has been consistently profitable over the past 35 years. (And with their fleet and their revenue and their market cap and their market share, you can't call them anything other than a major airline. International, no. Major, you bet.)

You must be in a/c maintenance. I notice that when someone blindly focusses on ourtsourceing of maintenance, then they tend to be in a/c maintenance. When they focus on outsourcing of gate and ATO agents, they tend to be in that area.

You keep parroting that SW outsources maintenance, but so does LCC. I don't know (and don't really care) if ANY major airline does 100% of their own maintenance. It is not sensible to do everything when there is someone else who can do the same work for less money.

It is not sensible to have company employees staff a station that gets just a few flights/day. I work for AA. BHM is a contract station because AA has 4 flights/day. The first departure is at 0650. The last arrival (an RON for the 0650) is at 2150. IIRC, ALL of the major airlines, except SWA, have outsourced their ground personnel at BHM, including LCC.

And, the argument that if they didn't have fuel hedging, they would not have been profitable or as profitable is facetious. It is in the same category of argument as "If my sister were a man, she would be my brother." My sister is not a man, and SWA did have fuel hedging. So, that ship has sailed.

All you can prove by arguing that SWA has fuel hedging is the fact that SWA has fuel hedging. And, unfortunately for all of the rest of us, they did it better than the rest of us. Just as they have done a lot of things better than the rest of us.

 

[insp89]

They outsource about 50% of ONE department which is MTC and IIRC, US outsources around the same percentage of MTC. Now compare the percentages of Cleaners outsourced and at most carrier the number is significant. SWA, to my knowledge doesn't outsource ANY cleaners or any customer facing staff including F/A's and pilots because they don't give 50% of their flying to meat bag contract carriers. So when you lump it all in SWA doesn't outsource near to the point of any carrier.

Most airlines bought hedges, SWA bought more and guessed better frankly because they are better business people.

Bob,
As I stated before, US does 50% of it's 737 HEAVY Maint. Checks in CLT, and 100% of it's 320 "S" Checks in PIT.
Care to guess the percentage of HEAVY Checks SW does INHOUSE ? Heres a Clue, it's nowhere near "around the same percentage of MTC."
Bob, Could you please post that article that breaks down the number of employees/aircraft that you are talking about?
Do you actually think it is right to include the contract carriers with US mainline ?
Did you include American Trans Air into Southwest ?

No doubt SW "guessed" better on their fuel hedges, and no doubt they are better business people, There is also no doubt that the "good" fuel hedges are winding down.

 

[insp89]

Maybe not, but they are the only major airline that has been consistently profitable over the past 35 years. (And with their fleet and their revenue and their market cap and their market share, you can't call them anything other than a major airline. International, no. Major, you bet.)

You must be in a/c maintenance. I notice that when someone blindly focusses on ourtsourceing of maintenance, then they tend to be in a/c maintenance. When they focus on outsourcing of gate and ATO agents, they tend to be in that area.

You keep parroting that SW outsources maintenance, but so does LCC. I don't know (and don't really care) if ANY major airline does 100% of their own maintenance. It is not sensible to do everything when there is someone else who can do the same work for less money.

It is not sensible to have company employees staff a station that gets just a few flights/day. I work for AA. BHM is a contract station because AA has 4 flights/day. The first departure is at 0650. The last arrival (an RON for the 0650) is at 2150. IIRC, ALL of the major airlines, except SWA, have outsourced their ground personnel at BHM, including LCC.

And, the argument that if they didn't have fuel hedging, they would not have been profitable or as profitable is facetious. It is in the same category of argument as "If my sister were a man, she would be my brother." My sister is not a man, and SWA did have fuel hedging. So, that ship has sailed.

All you can prove by arguing that SWA has fuel hedging is the fact that SWA has fuel hedging. And, unfortunately for all of the rest of us, they did it better than the rest of us. Just as they have done a lot of things better than the rest of us.

Tex,
I never said SW was not a Major carrier.

"Blindly" focuses on outsourcing of maintenance ? The whole point of this discussion is that Southwest requires less employees/aircraft than other carriers.
My contention is these charts and graphs that are supposed to prove this are deceiving to say the least.
Hopefully you are aware that it is very easy to slant the numbers every which way you want to come to a conclusion..[Sometimes the TRUTH takes a beating].

I found your story about someones sister being a man a little wacky, and it is not too difficult to come to the conclusion that SW's fuel hedges were by far the main reason they have been profitable in recent years. Heck, I've heard Southwest's CEO say it..